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Policy Analysis No. 274

How Rent Control Drives Out Affordable Housing

By
William Tucker

May 21, 1997

Executive Summary

Rent control has been in force in a number of major American
cities for many decades. The best-known example is New York, which
still retains rent controls from the temporary price controls
imposed during World War II. But this policy, meant to assist
poorer residents, harms far more citizens than it helps, benefits
the better-off, and limits the freedom of all citizens.

A look at the classified ads in rent-controlled cities reveals
that very few moderately priced rental units are actually
available. Most advertised units are priced well above the actual
median rent. Yet in cities without controls, moderately priced
units are universally available.

In many cities, policymakers understand that controls drive out
residents and businesses. Thus many exempt significant portions of
housing from controls, creating shadow markets. Yet as controls
hold down rents for some units, costs for all other rental housing
skyrockets. And tenants in rent-controlled units fear moving to
more desirable neighborhoods since the only units available for
rent are very high-priced.

But the trend in recent years has been toward removal of rent
control. The repeal of controls in Massachusetts, for example, did
not lead to the widespread evictions and hardships that some
predicted. The lesson for the rest of the country is that rent
control is policy that never was justified and certainly should be
scrapped.